Lessons to learn from project insurance confusion

Lessons to learn from project insurance confusion | Insurance Business

Remember the case between contractor Lakehouse and subcontractor Cambridge Polymer Roofing (CPR) over payout costs for a fire incident wherein a contract between the two meant the latter wasn’t covered by the project insurance? A construction specialist has revisited the dispute and shares the takeaways.

“The court eventually ruled against CPR on the basis it had to maintain its own separate insurance policy, which CPR was obliged to do as a part of its contract with Lakehouse,” construction and insurance lawyer Paul Lowe said in a piece published by Construction News. “CPR’s own policy superseded the co-insured status CPR thought it enjoyed as a part of Lakehouse’s insurance cover. Lakehouse’s insurer was therefore entitled to the full £5 million value of CPR’s own policy.”

Imagine if the subcontractor didn’t comply and wasn’t covered by its own insurer.

As for contracts, the Weightmans associate claims the construction industry uses what he described as “cookie-cutter” documents that at times go initialled without proper scrutiny.

“To avoid problems later, firms must be certain that their insurance position is sound at the outset of a project,” he said. “Companies should ensure they understand their obligations and risks before they sign contracts and check that there isn’t any overlapping, conflicting obligations.

“Those currently engaged in live works should speak to their employer to check if the wording of the contract they have signed means they are covered by their project insurance policy, and check contracts carefully to see whether they must also maintain their own policy and, if so, check that it is in place.”

Lowe believes the construction and insurance industries must work together “to ensure proper protection for all” parties.